Dallas on the Aller

Porsche: Peace means nothing if the lessons of war aren’t learned. The board of Porsche, the German sports car maker, seems to be ready to sign on a deal that would end the long-standing dispute with rival Volkswagen, thus ending the feud between its two controlling families. But unless the companies’ governance improves, another crisis will be hard to avoid.

Porsche amassed some 10 billion euros of debt while acquiring a majority stake in its much larger competitor. But the state of Lower Saxony’s blocking 20 per cent stake in VW means Porsche can’t control its prey. The family angle is that VW’s supervisory board chairman Ferdinand Piëch also heads one of the two feuding clans of the Porsche family.

According to several press reports, Volkswagen will use its 8 billion euro-odd cash pile to buy Porsche’s car division, leaving the listed Porsche SE as holding company owning a majority of VW. Some serious issues are yet to be resolved, not least a possible 3 billion euros tax bill triggered by the deal.

A change of control of the brand has long seemed the obvious way to untangle the financial web. But if the deal goes through, Volkswagen will end up bailing out Porsche and its controlling families by buying a luxury brand it doesn’t need: in that market segment, it already owns Bently, Audi, Lamborghini and Bugatti.

To put it bluntly, Piëch will mastermind the transfer of part of VW cash to reduce debts in his own family’s company. But the dispute has also highlighted other anomalies both in Germany’s corporate laws and the two companies’ bylaws. First, Piëch was able to use the state of Lower Saxony as an ally in his fight against VW’s majority shareholder. Second, half of Porsche’s owners, the holders of preferred shares, have no voting rights.

The families are said to be trying to safeguard their 50 per cent holding in the future company. But, their sometimes farcical feud over the last months seems to show they aren’t fit to call the shots at one of the world’s largest car makers. They should step aside and let other shareholders vote.